As the United States continues to address many of its economic challenges by imposing reciprocal tariffs on sixty countries, it is an opportune time to ponder how the World Trade Organization (WTO) fits into the current challenges.

There is a consensus that the US actions are causing global trade disruptions. Reaffirming its commitment to multilateralism, China continues to file appeals to the WTO as key components of its response to Trump’s Administration’s actions.

Why would WTO be considered necessary to this current global trade dispute?

The WTO has 166 member countries, representing over 95 percent of world trade, and is responsible for settling disputes concerning all goods, services, intellectual property, and particular investment policies. In the settlement process, the WTO pursues several key objectives: to establish and enforce rules for international trade and resolve trade disputes; to provide a forum for negotiating and monitoring further trade liberalization; to enhance the transparency of decision-making processes; and to collaborate with other major international economic institutions involved in global financial management.  It strives to ensure that developing countries can fully benefit from the global trading system and works to protect the interests of small and open countries against the discriminatory trade practices of large and powerful nations.

What is the status of the WTO?

The Director-General of the World Trade Organization, Ngozi Okonjo-Iweala, said new tariffs announced by the US on top of those introduced earlier this year could lead to a contraction of global merchandise trade volumes in 2025. “I’m deeply concerned about this decline and the potential for escalation into a tariff war with a cycle of retaliatory measures that lead to further declines in trade,” she said in a statement on April 3, 2025.

Beyond the note of concern, there have been little to no measures emanating from the WTO to address global concerns or to speak up to protect the interests of small, open, vulnerable countries such as those of the Caribbean region. China, a major player in global trade, seems to retain some confidence in the WTO as part of its continued support of multilateralism.

On April 8, 2025, China requested WTO dispute consultations, which were circulated to all members on the same day.  It addressed US measures to impose an additional 10 percent duty on imports from all trading partners, effective April 5, and a 34 percent additional duty on imports from China, which has since increased to 104 percent, effective April 9, 2025. 

Is there optimism that WTO can effectively intercede?

This recent move by the current US administration is not the first disruption to global trade flows. The US has been shifting away from free and open trade since the Obama administration as it sought to double US exports by 2014.  The US established its trade enforcement council and began engaging in ‘settlement disputes’ outside WTO prescriptions.

The arrival of the first Trump administration worsened the WTO’s effectiveness. Cédric Dupont, a professor at the Graduate Institute of International and Development Studies in Geneva, noted that the “first Trump administration effectively killed the WTO’s appellate body, which serves as the highest court of global trade, by blocking the appointment of new members to replace those retiring.”  This blockage occurred while China challenged the US at the WTO regarding the tariffs imposed on Chinese steel and aluminum exports to the US and similar disputes on trade barriers with other countries.

During President Biden’s tenure, the US government ignored several WTO rulings, including the declaration that President Trump’s 2018 steel and aluminum tariffs violated the United States’ WTO obligations.  The US Trade Enforcement Council experts have argued that the WTO appellate body had overstepped its authority by reversing the decisions of US-based expert panels. 

Where are we today?

When China joined the WTO in 2001 (December), the US was the global economic powerhouse. At that time, the US GDP was more than seven times that of China, 10.58 trillion and 1.34 trillion dollars, respectively. Japan was second, at 4.37 trillion dollars.

By 2024, while the U.S. remains the world’s largest economy with an estimated GDP of $29.2 trillion, China’s GDP is estimated at $18.5 trillion, reflecting exponential growth and now accounting for 63 percent of the US GDP. China has also mushroomed to become the largest global trading partner. 

Many Multinational Corporations dominated by US and European investors continue to view the Global South, particularly Asian countries, as more favourable to domiciled manufacturing enterprises to capitalise on labour, technological, and other advances. In response, the Trump administration is in an all-out tariff blitz, in firm opposition to the objectives established under the WTO, where it is a founding member.

More than 50 countries are currently seeking bilateral resolution with the US and bypassing the WTO’s international trade dispute mechanism. In fact, there is little to nothing being heard from the WTO save for China fillings. The WTO watches on, providing occasional pearls of wisdom in the face of the current global trade challenges

One thing that is clear is that global trade patterns have evolved, and the US is no longer at the center. Given the advances in shipping logistics and many regional trade pacts that have developed outside the US, there is considerable scope for a realignment of trading relations that could see global trade continue to expand, notwithstanding the current policy stance of the US.

A prime example is the Belt & Road Initiative, which has resulted in the development of trade routes by sea and air throughout the global south that does not depend on the goodwill or the resources of the US.  There are also opportunities to further strengthen our regional trade relations at both the OCES and Caricom levels, in both the public and private sectors, to forge alternative pathways for procurement, particularly of goods. 

As small open countries heavily dependent on international trade to satisfy capital investment and domestic demand, we will be significantly impacted by the current happenings.  We cannot depend on any effective intervention from the WTO. We must find ways to protect our national and regional interests to minimize the looming impact on our standard of living and economic growth. We must look to build out the logistics infrastructure and find partnerships to facilitate trade that further our interest.